Fabryka Farb i Lakierów Sniezka (SKA) Q3 2024 earnings summary

Executive summary

• Revenues for Q1-3 2024 declined by 8.1% year-over-year to PLN 647.7 million, mainly due to lower sales volumes in key markets and adverse currency effects, particularly PLN strengthening against UAH and HUF, which reduced revenue dynamics by about 2.5%.

• Net profit for the period was PLN 67.4 million, a decrease of 18.3% year-over-year; EBITDA was PLN 126.5 million (-12.8% y/y); EBIT was PLN 98.4 million (-15.1% y/y).

• Despite challenging market conditions, market share was maintained in Poland and expanded in Ukraine, with a dividend payout of nearly PLN 40 million (PLN 3.17 per share) in May.

• The Group's performance was impacted by increased selling and administrative expenses (+10%), primarily from higher salaries and external service costs.

• The Group's key markets are Poland (71.7% of revenue), Hungary (13.1%), and Ukraine (10.0%).

Financial highlights

• Q1-3 2024 revenues: PLN 647.7 million (-8.1% y/y); EBITDA: PLN 126.5 million (-12.8% y/y); Net profit: PLN 67.4 million (-18.3% y/y).

• Gross margin improved to 49.1% (from 44.3% a year earlier), attributed to pricing policy, production cost control, and PLN strengthening against EUR.

• EBITDA margin was 19.5% (from 20.6% y/y); net profit margin at 10.4% (from 11.7% y/y); ROA was 8.1%; ROE was 18.5%.

• Q3 2024 revenues: PLN 245.0 million (-9.4% y/y); net profit: PLN 35.7 million (-13.3% y/y).

• Net debt/EBITDA increased to 1.60 from 1.38 a year ago; cash and equivalents at period end were PLN 60.2 million.

Outlook and guidance

• Strategic targets for 2028: consolidated net revenues of PLN 1.1 billion, EBITDA margin of 18%, and market share above 20% in Poland, Hungary, and Ukraine.

• The Group did not publish financial forecasts for 2024; management highlights ongoing macroeconomic uncertainty, consumer demand unpredictability, raw material market volatility, and the impact of the war in Ukraine as key risks.

• Plans to maintain dividend policy and continue investments as per current strategy, assuming stable business conditions.

• Demand in coming quarters may be influenced by consumer sentiment, purchasing power, and high interest rates.